Budget Resolutions and Economic Situation
The Budget was a whirl of little things. I picked up a road map, a taskforce, a few bob scattered around various organisations, and even a few pence off a jar of gherkins. But it is a missed opportunity. It smacks of managerial incrementalism, rather than the bold and radical reforms that our economy needs if it is to meet the challenges of the future. Those challenges include intergenerational unfairness, an ageing population and—heavens above—the menace presented by Vladimir Putin. The Budget is based on the somewhat smug false premise that somehow the economy is going broadly in the right direction. It is not. The Chancellor prayed in aid the comments of the IMF on near-term growth and fiscal consolidation. However, the reality is that that should not be the benchmark. We should not be looking at France, which has had so much civil, economic and political unrest that it is heading towards a potential bond crisis. We should be asking a fundamental question: what level of growth does the economy need to address the challenges that I have just set out? The answer is that we need to at least get back to the growth trends that we had before the global financial crisis—at least 2% to 3% per year. We are a very long way from that. The Chancellor lauded the fact that growth has been revised up for this year; he neglected to mention that from next year the position is very different indeed. He made no attempt to acknowledge the mistakes that this Government have made since they came to office. Huge mistakes by his predecessor, such as massive tax increases predominantly on businesses, have had the effect of lowering investment, raising unemployment, reducing output, and—because taxes are often passed on in higher prices—pushing up the rate of inflation. We are now in a position where, if my reading of the OBR document is correct, due to the inflationary effect that this Government have in part induced, fiscal drag alone will result in more than 200,000 average days’ work being destroyed. We are left with almost the highest level of unemployment in five years, high and sticky inflation, high interest rates, massive servicing costs on our national debt and huge levels of borrowing. In its document, the OBR sets out what is happening to real household disposable income across the forecast. If my reading is correct, it is lower now across every year within this set of forecasts than in the forecasts back in March. In other words, hard-working people up and down the country are getting poorer as a direct result of the actions taken by this Government.